Would be nice to have at least one banker's name who survived hyperinflation and walked away "filthy rich".
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Would be nice to have at least one banker's name who survived hyperinflation and walked away "filthy rich".
I'm surprised I'm expected to provide evidence that bankers make money when they print money out of thin air.
But Rothschilds controlled banks in different countries, and after hyperinflation they had great losses in those subsidiaries. I cannot explain it here simple way, but the banks are merely intermediaries between money owners and borrowers. To some extent, they are constrained by official central bank rates when setting the price of money (because they keep reserves with the central bank), and thus, the interest rates they can offer to clients or charge to debtors.
When the price of money rises—even without hyperinflation, as we now see with high rates in Russia and Turkey—bad debt accumulates, and companies gradually become unable to service their loans. Even if a bank eventually obtains something from a company through court after several years, the losses are substantial. What’s more, even companies that had no debt suffer when suppliers or clients start going bankrupt one after another. And when a bank seizes a company for unpaid debt, it still lacks the resources to keep that company afloat.
You know, it’s a bit like that joke where a man can’t sleep because he owes his neighbor money. So his wife calls the neighbor and says, “My husband won’t repay the debt tomorrow.” Then she hangs up and says, “Now let him lose sleep.”
That’s exactly the situation with banks: they’re constantly at risk of not getting their loans back, yet they must keep servicing deposits at roughly the same rates. Under normal economic conditions, that’s fine—it’s day-to-day operations, and risks are priced into the interest rate spread. But in extreme scenarios, everyone ends up without their trousers.